In line with industry trends to reduce operating costs, BHP Billiton has suspended production at the Yarrie mine in the Pilbara.
The decision comes in line with news that BHP will take over their last contractor run site, Orebody 18, currently managed by mining services contractor MacMahon.
About 80 of the 160 employees at Yarrie will be moved to the Jimblebar operation, which will manage the Orebody 18 site, while remaining workers will be moved to other Pilbara operations.
MacMahon has managed Orebody 18 since January 2007, and will complete the handover to BHP by the end of the financial year, completing BHP’s plan to convert the West Australian iron ore business to a fully owner-operated model.
In 2011 BHP bought out one of its mine operators, HWE Mining, and began a trend for mining companies to move towards managing their own mines instead contracting the work.
Over the past six months Fortescue Metals Group has taken control of its mines in the Pilbara, and BHP and Glencore have taken over many of their Queensland coal mines.
BHP Billiton iron ore president Jimmy Wilson said the decision to suspend production at Yarrie was made as an additional productivity measure for their iron ore business.
“Excess trucks and shovels made available due to improved productivity at our other mining operations will be used at Orebody 18, resulting in no additional truck and shovel purchases required to operate the site,” he said.
“We will redeploy Yarrie employees to our Jimblebar operation, which will manage Orebody 18, and other areas of business where possible.
“We are committed to the safe, effective and efficient transfer of the Orebody 18 operation to BHP Billiton and we will work closely with MacMahon to ensure this happens.”
Yarrie is the smallest operation in the Pilbara, with production of 1.1 million tonnes last financial year, and is the only BHP mine on the Mt Goldsworthy railway line, a BHP spokesperson told Australian Mining.
BHP would not speculate on the future of its Mt Goldsworthy rail line. It is the only BHP line declared open to access by third parties after a landmark 2010 ruling by the Australian Competition Tribunal.
BHP has declined to comment about the conditions required to reopen the Yarrie mine, stating that suspension of production is indefinite.
BHP would not comment on the suggestion by McMahon chief executive Ross Carroll; that McMahon was already in talks with BHP about other potential contracts in the region.